"E.I.G. - Entertaining, Informative, Good-to-know"
One goes up, the other goes down.
August 15, 2017 – by Lindsey Richter
Inverse relationships. Predictable. Easy to understand. Otherwise defined as when one
thing goes up, the other thing goes down. You can find examples of inverse relationships in math, science, and also everyday life. Especially life with a toddler. For example, bedtime. Bedtime is
absolutely not directly related to their wake-up time the next morning – it is inversely related. Always. Go to bed at 8 p.m., wake up at 7 a.m. Go to bed at 10 p.m., wake up at 5:30 a.m.
Early to bed, early to rise. Late to bed, early to
rise. Another case, if you have 30 minutes to be somewhere, the toddler will walk quite nicely to wherever you need to go. Should you be running late and have merely 10 minutes to get there, this
said toddler will walk at the speed of frozen snot instead. The less time you have to spare, the more slowly he'll walk. And hey, maybe even walk backwards – as was my experience this morning during
drop-off. I really thought he was walking behind me on the sidewalk. Incorrect. He was walking backwards. Slowly and backwards – would that be like
a double-inverse relationshi…. yeeeaah, I don't even know. It's just the way the world works. It's in their innate, internally programmed toddler handbook. The Rules of Toddlerhood. Rule #1:
drive mommy mad. Rule #2: look really cute and say adorably hilarious things that also make mommy love you so much and forget her madness, convincing her to give birth to more adorably maddening
friends for you.
While the behavior of a toddler can sometimes be used as an example of an inverse
relationship, they are also complex, unpredictable
beings beasts so it doesn't always hold true. In contrast, enter: insurance deductibles. Deductibles truly do hold a predictable, inverse relationship with insurance premiums. As one goes
up, the other goes down. But let's back up here, and make sure we're all on the same page. You may have heard the term deductible, but do you really have a good understanding of it? Understanding
deductibles is important because it impacts how much $$$ you'll have to spend on insurance – whether it's up-front on your premiums, or the amount of money you have to pay for a car or home repair.
The deductible on an insurance policy is the amount you'll have to pay out-of-pocket in the event of a loss. And a deductible applies to your own property only. It would not apply to the cost of
fixing your neighbor's car you backed into or if your ex-best-friend tripped over a garden hose in your yard, broke their leg, and are suing you. Losses related to other's property and your liability
usually do not apply – but, you would have to pay the deductible to get your OWN car fixed after you hit your neighbor’s car or to get your OWN house repaired after a kitchen
You can typically choose from a variety of deductible amounts on your auto and home policies. Auto insurance policies require a deductible for the collision and comprehensive coverages. Collision coverage would pay to repair your vehicle should you be (you guessed it!) in a collision. Comprehensive coverage would pay for repairs caused by events you really couldn’t have prevented and that don't involve you hitting another car or piece of property (for examples, see our Auto Insurance FAQ’s-Part 1 blog). Collision and comprehensive coverage require you to pay the deductible out-of-pocket and then the insurance company will pay for the remainder of the repair bill. So, if you hit a telephone pole (collision) or if Bambi meets a tragic end with your car bumper (comprehensive), you would have to pay your respective deductible out-of-pocket and then the insurance company would pay for the remainder of the repair bill. For a simple example, if the damage is $2000, you have a deductible of $500, so you will have to pay $500 and your insurance company in-turn will pay the remainder -- $1500.
Like auto policies, homeowner insurance policies also contain deductibles, and offer various options for higher and lower deductible amounts. The deductible for a homeowner policy works in the same way it does with auto insurance. Should damage occur to your house – from fire, wind, hail, vandals, etc., you would have to pay the deductible first, and then the insurance company would cover the remainder of the repair bill. Again, for liability situations, deductibles usually do not apply.
Now, getting back to the idea of deductibles and premiums having an inverse relationship… let’s talk $$$! The general rule is, the lower your deductibles are, the higher your premium will be. The higher your deductibles are, the lower your premium will be. The cost of your auto insurance premium is broken down by coverage – liability, collision, comprehensive, towing/rental, etc. The cost of each of the coverages put together add up to your total policy premium. Typically, the collision coverage of a policy is the most expensive part – therefore, adjusting the deductible for this coverage may make the most difference in the overall premium you have to pay. As one goes up, the other goes down.
Now, there’s typically a lesser amount of premium attached to your comprehensive coverage. Therefore, raising or lowering the comprehensive deductible will not impact the premium as much as raising and lowering the collision deductible. But it will make some difference – again, as one goes up, the other goes down. And just like with auto insurance, the higher the deductible you choose for your homeowner insurance, the lesser your premium will be – and the opposite is true. One goes up, the other…. yeah, you get the point.
Now, what deductible amounts should you choose on your policies? Well, that's something you'll have to decide for yourself. How much can you afford to pay out-of-pocket should you experience a loss? How much premium can you afford annually? One way to analyze this: say a $2500 deductible saves you $500/year in premium verses a $1000 deductible. After 3 years, the money you would save in premium covers the extra you would have to pay out-of-pocket if you had a loss ($1500). Nobody can anticipate having an insurance claim or a tornado roaring through their neighborhood, but if paying $2500 out-of-pocket wouldn't break you financially, a higher deductible might be something to consider – and if you're claim-free, it may save you quite a bit in the long run. If your money situation just doesn't allow for you to afford an out-of-pocket $1000, $2500, or $5000 repair, then maybe it's worth it to pay a bit more premium for a $500 or lower deductible.
Sooo… tah dah!! Deductibles explained. Also, I successfully linked life with a toddler to the subject of insurance. You’re welcome! But on second thought, toddlers are basically the epitome of destruction… so, perhaps that isn't much of a feat after all. Regardless, take some time to check your policies. Think about your deductibles. Make sure they make sense for you financially. Questions? Give us a call and we'll be happy to help!
Under My Umbrella-ella-ella-eh-eh-eh…..
May 16, 2017 by Lindsey Richter
It's May, people!! Meaning warmer temps (finally!) and beautiful flowers – thanks to those pesky April showers. AND it's almost time for all the fun activities that come with sunny, outdoor weather! We're talking pools, boats, ATVs, backyard BBQs, and the like. I love it! However, thinking about these fun things while simultaneously being immersed in the world of insurance day-in and day-out led my mind to one thing – umbrella policies! Yep, that's right. Those wonderful little safety-net-type policies which can make a big, big difference if you ever find yourself in a sticky liability situation. I know, I know – I just saw your eyes glaze over at the term "liability", but hear me out here!
According to my husband (who is optimistic-to-a-fault), I am a pessimist. However, like most accused-pessimists, I strongly disagree and call myself a realist. I like to be realistic. I don't like to get my hopes up just to be disappointed. I prefer to acknowledge the reality of situations so that if it turns out less than optimal, I don't feel unprepared. As author Stephen King has said, "There's no harm in hoping for the best as long as you're prepared for the worst." I like to hope for the best, but I also can't help myself from thinking about the worst. And as part of responsible "adulting", acknowledging the possible reality of the unexpected is really important. You work hard! – for your cars, your house, your savings, your kids' futures… it's smart to be prepared. And one of the biggest ways you can be prepared is to make sure you're amply insured.
You may have never considered an umbrella policy before, but bottom line: if you have assets you want to preserve, you should strongly consider one. So what does an umbrella policy cover? Well, long story short, it will cover damages you owe someone in a legal suit or settlement in the event that it exceeds the liability coverage of your home or auto policy. Otherwise, if you can't pay out of pocket, a lien could be placed on your house, your wages could be garnished, and your savings or other assets could be at stake.
How do I know if I need an umbrella policy? Well, there's two preliminary questions to consider.
1. What do you have to lose? Are you just starting out, young, living on ramen noodles, broke, renting, healthy, don't have a lot up for grabs? Then perhaps an umbrella policy isn't necessary for you right now. In other words, if you wouldn't lose much in a major lawsuit, you might be fine without one.
However, if you do have a considerable amount of net worth – what you own minus what you owe – then it's likely you should consider purchasing an umbrella policy. To figure your net worth, add the value of your home, vehicles, savings & investments (assets) and then subtract the value of your mortgage, car loans, and other debts (liabilities). Because your future earnings could also be garnished up to 25% in a judgement, you may also want to consider multiplying your annual income by five and adding that amount to your asset total. So, your liability coverage from your home and auto policies should be enough to fully cover your net worth – if it isn't, an umbrella policy might be a good idea.
2. How risky is your lifestyle? There are several factors to consider, so I'll list them quickly: do you have a pool or trampoline, do you own several vehicles especially high performance ones or have several drivers in your household, do you own recreational vehicles including boats, do you entertain frequently or host large parties, how involved in social media are you, do you serve on any board of directors especially those for charities or non-profits, do you own vacant land, are you a landlord, is your home under renovation, do you have clients visit your home often? All of these factors increase your liability exposure – your risk of being held liable for an injury to another, whether it be bodily injury or other personal injury.
So… think these questions over – I may sound like your grandmother's broken record, but… "better safe than sorry"! And let's face it, your grandma was one smart lady, am I right?!
The good news is, umbrella policies are not that expensive, especially when considering the amount of coverage they provide. A $1 million policy can run between $150 to $300 annually. So let's just say you have your umbrella policy for 20 years at a premium of $300. At the end of the 20 years, the total premium you've paid still only amounts to 0.6% of the value of the policy coverage. That's a pretty good deal! One thing to keep in mind is that umbrella policies generally require higher liability limits on underlying auto and homeowner policies, so you may need to raise your limits if you do decide to go with an umbrella. Overall, still a lot of bang for your buck!
So, have more questions about umbrellas? Give us a call! We'll get your assets and your livelihood fully covered and protected. It pays to be prepared!!
I Love You Stinky Face!: A Series of "What Ifs"
March 15, 2017 – by Lindsey Richter
Recently, my wee little one received a book as a gift entitled "I Love You Stinky Face". The book is really quite cute. It brings to life the dialogue between a mother and young son where the child does something most kids do really well… asks A TON of questions. The story begins with the mom tucking the son into bed at night and she says "I love you my wonderful child." With this statement, an invisible light bulb illuminates in the child’s head, and he then begins a series of ridiculous yet entertaining questions which test the conditions of her love. "But Mama, but Mama, what if I were a super smelly skunk, and I smelled so bad that my name was Stinky Face?" The adoring mother replies that she would put him in the bath and try to get the smell off him… but if he still smelled, she would tell him "I love you stinky face." The back-and-forth questions and answers continue with several "what if" scenarios from the boy involving swamp monsters, green aliens, alligators with giant teeth, etc. And each time, the mother replies that she would still love him regardless of which crazy creature he was. That's just what we moms do, right?? – we love our little stinky faces unconditionally! Even when they drive us mad, intentionally spill cheerios on the floor to spite us, walk backwards at 0.3mph to go get their shoes on, take 30 minutes to go potty, etc. Unwavering love: just one of our many motherly superpowers. …Superpowers? Yes, I feel this is an accurate description – I mean, to top it all off, we grow HUMANS for crying out loud. So yes, moms = superheroes! And the mom in this book appears to be no exception.
So, continuing on here, to stay true to our blog's name, "E. - Entertaining, I. - Informative, G. - Good-to-know", I thought I would attempt to entertain you AND inform you with my own series of questions and answers. But I think I'll leave the green, slimy monsters out of it and stick with homeowner insurance-related scenarios. They're important questions to pose!… because, despite how much you want them to be, in some situations with claims and losses your insurance company may not be as grace-filled or forgiving as the mother in this tale. So, let us begin our own version of "I Love You Stinky Face":
But Mama, but Mama….
1. What if it rains and rains so hard for 5 days and water spills in through the cracks in the doors and there's 10 inches of water in our house? Am I covered?
Sorry Charlie, but you're not covered. Homeowner policies don't cover damages incurred from flooding, only flood insurance would cover this loss. In addition, homeowner policies don't cover losses caused from sewer or sump pump back-up; however, additional coverage can be added to most homeowner policies for this latter cause of loss. But if you want all-encompassing flood coverage, you'll have to buy a separate policy.
2. What if the tectonic plates become confused and think that they're in California and instead of Illinois and we have a massive earthquake and our house cracks in two? Am I covered?
Sorry to burst your bubble again, Chuck, but no. If you want earthquake coverage, this is an additional coverage often with an additional premium that must be added to your homeowner policy. Of course, it's unlikely that those pesky tectonic plates will confuse us here in the heartland for quake-prone, sunny Cali, but never say never.
3. What if a possessed deer breaks down the door and destroys our furniture and everything with its fierce, galloping hooves and 4-foot-wide rack of antlers? Am I covered?
Yes, Charles, you are in fact covered! In this scenario, that crazed deer would be classified as a vandal, and the peril of vandalism would be a covered loss.
4. What if there's a terrible storm and the power goes off for a long, long time and all of our food in the freezer goes bad and we have to go hungry? Am I covered?
Don't fret, Chas, you're covered! Homeowner policies usually cover loss of food in a refrigerator or freezer due to a power outage, often up to $500. You might want to check with your agent on the specific limit on your particular policy, but it should be enough to help you re-stock your freezer and fridge and fill up your hunger-pain-stricken belly.
5. What if our house was built over an old, long-lost jewel mine and one day it just decides to collapse and our house is swallowed up by the mine? Am I covered?
Oh, Chip (ok ok, so this one's a stretch, but I'm running out of variations of Charlie), so sorry but you're not covered, regardless of if it’s a jewel mine or coal mine. For this loss to be covered, you would have to add on mine subsidence coverage to your homeowner policy. So if you live in an area with known mines (Douglas County for example), it might be a good idea to ask your agent about this coverage.
So there you have it! You can all probably think of your own “what if” scenarios to ask. So go ahead, call up your agent – and if you're looking for a new one, call us! We can answer your "what ifs" and get them all covered!
Thanks for reading!
Auto Insurance FAQ’s- Part 2
February 17, 2017- by Drew Warf
Following up on our previous blog post- today we’ll be answering the final three common questions people have about their auto insurance. We’ve already covered limits and coverage questions, but let’s get deeper into some ins and outs of how certain situations could affect your insurance coverage and what do in an accident. Specifically, these three FAQs will be answered for you today...
5. Can I let a friend, family member, or neighbor borrow my vehicle? This question often trips people up because they’re not sure who is covered on their policy. As a general rule, anyone that lives in your household and is licensed must be listed on your auto policy, as well as anyone that regularly drives any of your vehicles (even if they don’t live with you). So all of the drivers in your household are listed and covered to drive any vehicle in most instances, but what about letting your neighbor drive your car to the store because theirs won’t start? What about when Aunt Teresa flew in from Oklahoma and wants to take your daughter to the mall on a shopping spree? The basic rule to remember in these situations is that as long as you have given your permission for them to take your car it’s going to be covered.
Just don’t forget to tell your insurance agent when Aunt Teresa decides to move in for good! Then you might be in a situation where, since you didn’t disclose another licensed driver in the household permanently, the insurance company might not be required to cover any losses caused by that person.
6. What should I do when I trade in my vehicle or purchase a new one? The 1997 Toyota Camry you worked your butt off for when you were 16 has been a reliable vehicle and you’re sad to see it go, but it is 20 years old and time for an upgrade! You research and shop around, finally settling on the perfect new ride. Congrats!! You’re driving around showing off your new wheels and it dawns on you, is my new car covered on my insurance?! There’s a good reason why people aren’t sure of their coverages, the answer is complicated. Coverage on a new vehicle depends on several factors. Here’s a breakdown of the several situations you could find yourself in when purchasing a new vehicle and what’s covered:
7. What should I do in the event of an accident? Unfortunately, this question is one that oftentimes people don’t consider until they’re in the moment. This is unfortunate for a couple reasons: first of all, it’s a stressful situation and not everyone is prepared to handle those situations rationally; and secondly, if not handled properly it could cause serious problems when it comes down to getting a claim paid or not. There’s a few things to always remember when you’re in a fender bender of any kind:
I’ll admit- it’s a lot of information to digest, let alone remember. For that reason, it’s important to review your coverages periodically and make sure you have the coverages you need. At Equity Insurance Group, we’re here to help! If you’re an existing customer, we make it a point to review your coverages annually and let you know if we think you need to make some changes. Even if you don’t have your insurance with us, we’re more than happy to give you a free quote and review your coverages. We come up with comparison quotes so you can see an “apples to apples” comparison, but also a recommendation for where we think you should be based on our conversations with you and an assessment of your needs. There are many more questions that could arise when shopping for auto insurance, so if you don’t find the answer here, give us a call or come in and we’ll be happy help J
Thanks for reading!
Auto Insurance FAQ’s- Part 1
January 26, 2017- by Drew Warf
Let’s be honest…how many of us think about our auto insurance other than when we pay it, put the new cards in our vehicle, or (unfortunately) get into an accident? Probably not often…it’s usually approached with a “set it and forget it” mentality. However, auto insurance is probably slightly more important than “setting” your rotisserie chicken for dinner and “forgetting it”. So what do all of those terms really mean? Do you really have the right coverages to suit your needs? At Equity Insurance Group, we decided to come up with a list of “Frequently Asked Questions” to give you a better idea of what your auto insurance really covers.
This week we’ll be covering questions 1 through 4- so stay tuned for future blog posts!
1. What liability limits do I need? Most people know that having car insurance in Illinois is the law and that there are “state minimum” limits. There’s been many times I’ve heard customers say, “Just get me whatever coverage will make me legal.” That’s a nice thought to make sure you don’t break the law, but it goes a lot deeper than just not getting an insurance ticket the next time you’re speeding on the way to work. As Lindsey touched on in our last post, it’s important to evaluate your assets and make sure those assets are covered in the event of an accident you’re liable for. For example, the “state minimum” car insurance requirements currently are:
When it comes down to it, those limits would cover very little in the way of medical bills or damage to another vehicle (especially if you pick out that brand new Lexus to swipe in the parking lot). If you only have the minimum limits and the damage you cause goes above that, you would be personally responsible for paying anything above and beyond those limits!
2. What does full coverage mean? Time and time again we have customers say, “I should know this, but what exactly does full coverage mean?” Most people get to a point in our life where the auto insurance we purchased in our teens or early 20’s is still sitting there the same as the day you bought it and what it actually covers is a mystery. Sometimes people are too embarrassed to even ask because they feel like as an “adult” they should know--- trust me when I say that you ARE NOT alone if you don’t know. The term can vary in meaning from company to company, but generally it means you have at least the minimum state required liability coverage, comprehensive, and collision coverage on your vehicle. Which brings to mind a couple other questions….
3. What does comprehensive coverage mean? Now we know that full coverage means that you have comprehensive coverage on your vehicle! Go you! But…..what the heck does that mean? Comprehensive coverage (also referred to as “other than collision” or “OTC” just to confuse you more) is designed to cover physical damage to your vehicle from damages that are not the result of an accident. Examples would include vandalism, theft, weather (no car looks good with hail dents all over it), and even other “acts of God” like when you hit that unsuspecting deer in your headlights… When something like this happens, your comprehensive coverage would kick in and pay to fix your vehicle after you pay the deductible. So take a look at your deductible (most people have about $500) and if you think you wouldn’t be able to afford a $500 price tag to fix your car, you might want to look in to lowering that so you would carry less of the burden if you would have a comprehensive claim. Of course it might cost you a little bit more premium, so you’ll have to weigh your options. We’re happy to quote any combination of coverages and deductibles to find out that perfect mix for you!
4. What does collision coverage mean? Okay great, your car is covered if someone steals it or a tree falls on it! But you also drive your car on the road with other vehicles and people- what if you would happen to (not saying you would!) hit one of them? It happens….sometimes to the best of us. If you get in to an accident that is your fault, your liability limits (if they’re high enough- see question #1) will cover any damage you do to someone else, their vehicle, or other property. What about that huge dent in the front of your car? That’s where your collision coverage would kick in. When an accident is your fault, your collision coverage will pay the repairs on your vehicle after you meet your deductible. The same concept applies to this coverage as comprehensive- the lower the deductible, the higher the premium. So figure out what you could afford to pay to get your car fixed if you are in an at-fault accident and that’s where your collision deductible should be. If you don’t carry this coverage, you’re going to have to foot the whole bill to fix your vehicle or get used to calling it “dent-y” until you can get it fixed.
Don’t forget to come back and get the following questions answered next time in Part 2!
Thanks for reading!
How to Shop...For Insurance
January 10, 2017- by Lindsey Richter
I LOVE to shop! I'm female and in the 26-40 year old age group, so perhaps this isn't surprising. But it's true… I love it! In the past couple years, since my little guy came along, I've found myself turning to online shopping more and more – it’s so convenient! In fact, I think my husband and I did about 98% of our Christmas shopping online this year. A fact our UPS guy surely wasn't thrilled about, but it was sooo much easier! One of the things I love most about shopping is finding good deals. The bigger the bargain, the better! This is definitely a genetic trait, passed down from my beloved mom – the running joke around our family is that she finds such great deals, eventually a store is going to pay her to buy something. And believe it or not, this actually happened a few months ago at a local department store… (what?!) crazy, I know! We definitely share a love for bargain hunting.
Shopping for insurance? A form of shopping? Yes. As entertaining, exhilarating, or enjoyable as scoring a sweet pair of wedge, over-the-knee boots for 50% off? Mmmm… probably not. But, definitely a necessary, responsible "adulting" activity that we all must do at some point in life, and probably multiple times as our needs change. Car, home, life, health, farm insurance -- we all have valuable things in our lives that need protection if the unthinkable happens. It's important to have the right coverage so that if a terrible accident, act of God, or a liability situation comes your way, you can protect yourself, your family, and maintain your standard of living. So, what are the important things to consider to make sure you have the right coverage? What should you look for when you do shop for insurance?
Sure, a bargain brings me great joy when shopping for a new dress or pair of shoes. But the best bargain doesn't always provide you with the best coverage when it comes to insurance. Of course, you need an insurance policy to fit into your budget, but you also need it to adequately protect your property and assets. If just a couple hundred dollars more per year provides $400,000 more in liability protection on your homeowner policy, then that's a pretty good deal considering the better coverage you would receive. Make sure to not just look at the face value of the premium, but really evaluate how much coverage that premium is providing you.
It's important to evaluate your assets. In other words, the things you own that have value. Liability coverage can protect your home, savings, and other valuable belongings (i.e. Great Uncle Ned's antique tie tack collection you inherited worth $$$$) or assets in a lawsuit where you are liable or at fault for an accident or injury. The state minimum requirements for auto insurance coverage are typically inadequate to fully protect you. Some experts recommend $250,000 per person and $500,000 per accident in liability coverage if you own a home and have an investment portfolio. And similar coverage for a homeowner policy. Other factors to consider would be if you own a boat, have a pool, or engage in any other activities that may increase your probability of needing higher liability limits.
Did you know that most homeowner policies do not cover water damage? Most policies require additional coverage to be purchased if you want damage from sewer back-up, sump pump back-up/overflow, etc. to be a covered loss. So if you're zip-lining and sun bathing on a Caribbean excursion while the great rains come, and your sump pump decides to go on vacation too, (wah-Wah-WAH…) uh oh. Every insurance policy will contain exclusions, so it's important to understand what these are and decide if there are additional coverages that you should purchase.
When shopping for insurance, it can be helpful to ask for a quote first for coverage that is identical or nearly identical to the policy you currently have. Then, if you are debating about whether to add a coverage line or increase your liability limit, ask for a separate quote. It can be easier to weigh the options when you're looking at two identical policies instead of only new policies with totally different coverages or increased limits. Like trying to decide whether to buy an amazing, slimming dress, the perfect size and pocketed purse, or a fabulous go-with-everything pair of heels. Impossible (i.e. buy them all). Compare 3 dresses. Stick with the apples to apples.
If you think about who you would call first to shop for insurance, some big name companies might first pop in your mind. And understandably so -- you see their adds, billboards, and commercials all the time. Some of these are really great companies with respectable and helpful agents. Sometimes you can find some really great, affordable coverage with them. Another option to remember is independent agencies -- (**trumpet chime**) such as Equity Insurance Group. Independent agents have access to several different insurance carriers (companies) that can also provide great coverage at an affordable price. One pro of hitting up an independent insurance agent when you need to do insurance shopping is… they do most of the work for you! They can shop around their list of different carriers, show you different quotes, explain levels of coverage, and give price comparisons. Often (or always in our case), they can provide lifelong, personalized customer service. They are usually local people that you can call up directly, get a real-life, live person the first time, and get questions or problems answered or handled quickly. And if your rates go up, they can shop around again for you, meaning you can probably stay with the same agent versus having to shop around yourself and totally switch to another big name company and a new agent.
So, insurance shopping -- not the most exciting shopping experience you'll ever have in your lifetime, but these 5 points can make the process a little easier, less confusing, and hopefully more enjoyable. Understanding what you're buying is key to make sure you are adequately covered for the "what-ifs" in life.